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Mechanism Design with Moderate Evidence Cost

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  • Bull Jesse

    (Florida International University, bullj@fiu.edu)

Abstract

This paper addresses how a moderate evidence disclosure cost can be incorporated into mechanism-design analysis. The paper shows that in public-action settings with transferable utility one can restrict attention to a class of three-stage dynamic mechanisms. Under complete information with two or more players, a version of this type of mechanism can be used to eliminate evidence production in equilibrium. The paper also provides conditions on the evidence environment under which the class of mechanisms studied in Bull and Watson (2004) is equivalent to those considered here.

Suggested Citation

  • Bull Jesse, 2008. "Mechanism Design with Moderate Evidence Cost," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-20, May.
    • Handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:15
    DOI: 10.2202/1935-1704.1446
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    References listed on IDEAS

    as
    1. Joel Watson, 2007. "Contract, Mechanism Design, and Technological Detail," Econometrica, Econometric Society, vol. 75(1), pages 55-81, January.
    2. Jerry R. Green & Jean-Jacques Laffont, 1986. "Partially Verifiable Information and Mechanism Design," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(3), pages 447-456.
    3. , & ,, 2006. "A study in the pragmatics of persuasion: a game theoretical approach," Theoretical Economics, Econometric Society, vol. 1(4), pages 395-410, December.
    4. Bull, Jesse & Watson, Joel, 2007. "Hard evidence and mechanism design," Games and Economic Behavior, Elsevier, vol. 58(1), pages 75-93, January.
    5. Deneckere,R. & Severinov,S., 2001. "Mechanism design and communication costs," Working papers 23, Wisconsin Madison - Social Systems.
    6. Lipman Barton L. & Seppi Duane J., 1995. "Robust Inference in Communication Games with Partial Provability," Journal of Economic Theory, Elsevier, vol. 66(2), pages 370-405, August.
    7. Bull Jesse, 2008. "Costly Evidence Production and the Limits of Verifiability," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-28, July.
    8. Evans, R., 2006. "Mechanism Design with Renegotiation and Costly Messages," Cambridge Working Papers in Economics 0626, Faculty of Economics, University of Cambridge.
    9. Bull, Jesse & Watson, Joel, 2004. "Evidence disclosure and verifiability," Journal of Economic Theory, Elsevier, vol. 118(1), pages 1-31, September.
    10. Jacob Glazer & Ariel Rubinstein, 2004. "On Optimal Rules of Persuasion," Econometrica, Econometric Society, vol. 72(6), pages 1715-1736, November.
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    Citations

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    Cited by:

    1. Mehdi Ayouni & Frédéric Koessler, 2017. "Hard evidence and ambiguity aversion," Theory and Decision, Springer, vol. 82(3), pages 327-339, March.
    2. Strausz, Roland, 2017. "Mechanism Design with Partially Verifiable Information," Rationality and Competition Discussion Paper Series 45, CRC TRR 190 Rationality and Competition.
    3. Jesse Bull & Joel Watson, 2019. "Statistical evidence and the problem of robust litigation," RAND Journal of Economics, RAND Corporation, vol. 50(4), pages 974-1003, December.
    4. Jesse Bull, 2013. "Interrogation and Evidence Fabrication," Working Papers 1303, Florida International University, Department of Economics.

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    Keywords

    evidence cost; mechanism design;

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